Health plan's annual cost put at up to $150 billion

May 03, 1993|By New York Times News Service

WASHINGTON -- Government financial experts have told the White House that President Clinton's health-care plan might require $100 billion to $150 billion a year in new public and private spending by government, business and consumers, depending on the scope of benefits guaranteed to all Americans.

Several administration officials say that estimate is too high and are urging that it be reduced, which the financial experts have refused to do.

The estimates, coming at a time when Congress is anxious about new taxes needed to pay for a reorganization of the health-care system, are contained in confidential work papers from the President's Task Force on National Health Care Reform.

Financial experts have been working on cost analyses for months, but only recently, as the administration's thinking has crystallized, have estimates of overall costs begun to circulate inside the government. They had not been made public before.

The experts, from the Federal Health Care Financing Administration, estimated the cost of three possible packages of benefits. The least generous would cost $99.5 billion a year and the most generous would cost $150.6 billion, they said.

Not all of that money would come from the government, but the administration has not decided how the cost might be divided among government, businesses and households.

Nor has Mr. Clinton decided which type of package to propose when he unveils his plan this month, though White House officials have said it will be comprehensive.

The three possible benefits packages would cover hospital and doctors' services and some prescription drug costs, but they vary widely in how much of the cost would be covered by insurance and how much consumers would have to pay.

The manager of the task force, Ira C. Magaziner, estimated in early February that the health program might require $30 billion to $90 billion a year in new spending by the federal government alone.

The nation as a whole is expected to spend more than $900 billion on health care this year.

White House officials say the new estimates are subject to change because final decisions on the details of the president's plan have not been made.

Moreover, they say that people should not be alarmed by the estimates because total spending on health care in the United States is already increasing by $100 billion a year. They say Mr. Clinton's plan eventually would slow the increase.

Most of the new money -- $69.5 billion to $82.2 billion, not all of it from the government -- would be needed to provide coverage for people who do not have any health insurance, the actuaries said.

The Health Care Financing Administration runs Medicare and Medicaid, the programs for 67 million elderly or poor people. The agency's chief actuary, Roland E. King, and his staff have decades of experience in estimating health costs and population trends.

On Capitol Hill, they are respected for independence, integrity and accuracy. But some economists at other agencies still favor lower estimates.

Hillary Rodham Clinton, the head of the task force, said in an interview last week that it was "very difficult" to get government agencies to agree on cost estimates or even on procedures for estimating.

To some extent, the disagreements involve technical issues. But they could have a significant political effect on members of Congress, who will be asked to help finance Mr. Clinton's plan with new taxes.

Work papers from the task force show disagreements between two agencies in particular. The Agency for Health Care Policy and Research, a unit of the U.S. Public Health Service, offered lower estimates for "insuring the uninsured": $42.6 billion to $49.3 billion a year from all sources, or roughly 60 percent of the cost computed by the Health Care Financing Administration.

The lower estimates assume that uninsured people, like insured workers, are generally healthy, The higher estimates assume that substantial numbers of the uninsured will be heavy users of health care, as Medicaid recipients are.

Mr. Clinton has said for more than a year that he wants to require employers to provide or arrange health insurance for their workers. The president has said his plan would provide "the security of guaranteed access to comprehensive health care" for all Americans.

White House officials say the plan would reduce administrative costs, curb inflation in health care and save money in the long run. But significant savings are not expected for five or 10 years, and Mr. Clinton wants to take immediate action to provide coverage for the 37 million people who have no health insurance.

Kenneth E. Thorpe, the federal official in charge of cost estimates for the administration task force, said the work papers were prepared as part of "a conceptual exercise" to help Mr. Clinton understand the cost of various options proposed by his health policy advisers.

The president already has asked Congress for a tax increase of more than $270 billion over five years. That money would be to reduce the federal budget deficit, not to pay for his health care plan, which would require large amounts of revenue beyond that already requested.